quarta-feira, 25 de maio de 2016
Greek debt agreement reached
Greek debt agreement reached
Eurogroup to release €7.5 billion of bailout cash in June and more after the summer.
By HORTENSE GOULARD AND CHARLES LEE 5/25/16, 3:46 AM CET Updated 5/25/16, 5:09 AM CET
Eurozone finance ministers struck a deal that will unblock the next round of international funding for debt-strapped Greece after all-night negotiations in Brussels that ended in the early hours of Wednesday.
Dutch Economy Minister and President of the Eurogroup Jeroen Dijsselbloem declared at a press conference that this was “very good news — it shows that the [bailout] program is fully back on track.”
The Eurogroup of ministers representing the 19 countries that use the euro agreed to release €7.5 billion in a new tranche of its €86 billion rescue package for Greece in June, followed by another €2.8 billion after the summer — provided that Athens meet all of the creditors’ preconditions.
Without these fund injections, Greece will default on its debt payment, potentially reopening the possibility of its withdrawal from the eurozone and reigniting doubts about the future of Europe’s common currency.
In return for the fresh funds, Greece promised to keep its primary budget surplus at 3.5 percent of GDP until 2018 by implementing various reforms related to public pensions, personal income tax, and public-sector wages. But if the Greek government misses the agreed target, a package of contingency measures will kick in automatically to bring the budget back in line with the bailout requirements.
Over the past few weeks, the Greek parliament adopted a series of legislation, including on pension reform and the establishment of a privatization fund. The hugely unpopular moves with the Greek public went a long way to convince the country’s creditors that Athens might be finally getting serious about undertaking difficult reforms and smoothed the way for today’s agreement.
On the most contentious topic of debt relief, the Eurogroup has agreed to consider it on a step-by-step basis “as necessary.” Based on periodic “debt sustainability analysis,” the creditors will take progressively increasing number of technical measures to ensure that Greece will not be overwhelmed by its debt payment obligations. Partial debt forgiveness — or a “haircut” — was quickly ruled out.
Although all this was less than an unequivocal embrace of debt relief, it marked a departure from the earlier insistence by Germany — Athens’ biggest creditor — that no concession would be made on how much debt Greece must ultimately pay back.
Crucially, the agreed deal will keep the International Monetary Fund on board the rescue program. The Washington-based fund had threatened to pull out unless Greece’s eurozone creditors agreed to relieve its debt burden, which it considered to be unsustainable. The IMF’s departure would have endangered the continued participation of several creditor countries in the Greek bailout, as they deemed its expertise and rigorous follow-through as indispensable to the success of the rescue program.
The IMF’s board is now expected to approve the release of additional funds of its own by the end of 2016. Still, Poul Thomsen, the organization’s representative at the Eurogroup meeting, let it be known at the press conference he was disappointed that Greece’s creditors did not agreed to any upfront debt relief. The IMF last week had called for a moratorium on Greek debt payment until 2040.
Hortense Goulard and Charles Lee